Statement of Intent - 2005-08 - Part 4

Forecast financial schedules for administered accounts - Crown

Statement of accounting policies

for the year ending 30 June 2006

Reporting entity

The forecast Crown Financial Schedules have been prepared in accordance with the requirements of the Public Finance Act 1989.

Inland Revenue administers activities on an agency basis on the Crown’s behalf.  These activities comprise elements of income, expenditure, assets, liabilities and cash flows, which form part of the consolidated forecast financial statements of the government.

The forecast financial information has been prepared by Inland Revenue and represents extract information of the Crown activities which are administered by Inland Revenue.

Measurement system

These schedules have been prepared on the basis of modified historical cost unless otherwise stated. 

Accounting policies

The following particular accounting policies, which materially affect the measurement of financial results and financial position, have been applied.

Revenue

The Crown provides many services and benefits that do not give rise to revenue.  Further, payment of tax does not, of itself, entitle a taxpayer to an equivalent value of services or benefits, as there is no direct relationship between paying tax and receiving Crown services and transfers.  Where possible, revenue is recognised at the time the debt to the Crown arises.

Revenue type	Revenue recognition point
Source deductions (PAYE)	When an individual earns income that is subject to PAYE
Resident withholding tax	When an individual is paid interest or dividends subject to deduction at source
Fringe benefit tax (FBT)	When benefits are provided that give rise to FBT
Provisional tax	Payment due date for other persons and companies
Terminal tax	Assessment filed date for other persons and companies
Goods and services tax	When the liability to the Crown is incurred
Stamp, cheque and credit card duties	When the liability to the Crown is incurred
Other indirect taxes	When the debt to the Crown arises

Investment income

Investment income is recognised in the period in which it is earned.

Receivables and advances

Receivables and advances are recorded at the amounts expected to be ultimately collected in cash.

Liabilities

All liabilities are recorded at the estimated obligation to pay.

Specific accounting policies and forecast assumptions

Forecast assumptions

For forecast purposes, no revaluations are projected beyond the current year.

Finalisation dates

The forecast financial statements were finalised on 11 April 2005.

Forecast periods

The reporting periods covered by these forecast financial schedules are the years ending 30 June 2005 and 30 June 2006.  The forecasts for 30 June 2005 have generally been prepared using actual data to 31 March 2005.  Transactions for the remainder of the year are forecast in accordance with the Crown’s accounting policies and forecast assumptions.

Changes in accounting policies

There have been no changes in the Crown accounting policies applicable to the preparation of forecast financial statements of Crown activities administered by Inland Revenue for Crown consolidation, from those used in the previous year.  All Crown accounting policies have been applied on a basis consistent with the previous year.

Schedule of Forecast Revenue - Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Direct taxation
Income tax
Individuals
Source deductions	17,650,000	17,654,000	18,653,000
Other persons	4,040,000	4,001,000	4,070,000
Refunds	(880,000)	(880,000)	(900,000)
Fringe benefit tax	426,000	435,000	451,000
Sub-total individuals	21,236,000	21,210,000	22,274,000
Companies
Gross company tax – other	6,495,000	7,286,000	7,797,000
Gross company tax – state-owned enterprises	385,000	394,000	435,000
Gross company tax – Crown entities	54,000	48,000	57,000
Gross company tax – NZS fund	181,000	234,000	341,000
Refunds	(163,000)	(168,000)	(180,000)
Sub-total companies	6,952,000	7,794,000	8,450,000
Withholding tax
Residents' interest	1,300,000	1,470,000	1,529,000
Residents' dividends	55,000	59,000	65,000
Foreign source dividends	135,000	166,000	182,000
Non-residents' income	816,000	937,000	813,000
Specified superannuation tax	0	546,000	577,000
Sub-total withholding tax	2,306,000	3,178,000	3,166,000
Total income tax	30,494,000	32,182,000	33,890,000
Other direct taxation
Estate and gift duties	2,000	2,000	2,000
Sub-total other direct taxation	2,000	2,000	2,000
Total direct taxation	30,496,000	32,184,000	33,892,000

The accompanying policies form part of these financial schedules.

Schedule of Forecast Revenue – Crown as administered by Inland Revenue (continued)

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Indirect taxation
Goods and services tax
GST (Inland Revenue)	15,917,000	15,837,000	16,572,000
GST (refunds)	(7,172,000)	(6,939,000)	(7,311,000)
Sub-total GST	8,745,000	8,898,000	9,261,000
Other indirect tax
Stamp and cheque duties	54,000	9,000	8,000
Approved issuer levy	0	53,000	54,000
Gaming duties	318,000	314,000	328,000
Other indirect tax	1,000	0	0
Sub-total other indirect tax	373,000	376,000	390,000
Total indirect taxation	9,118,000	9,274,000	9,651,000
Total taxation	39,614,000	41,458,000	43,543,000
Compulsory fees, fines, penalties and levies	241,100	278,800	314,200
Investment income	448,530	444,618	496,180
Total operating revenue	40,303,630	42,181,418	44,353,380

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Expenditure – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Benefits and other unrequited expenses
Family support tax credit	918,000	902,000	1,298,000
Family tax credit	14,000	13,000	14,000
Child tax credit	150,000	142,000	141,000
Parental tax credit	15,000	14,000	16,000
In-work Payment	0	0	57,000
Paid parental leave	74,300	77,500	97,900
Total benefits and other unrequited expenses	1,171,300	1,148,500	1,623,900
Change in debt provisions
General tax provision	4,620	77,858	77,967
Student loan provision	88,674	78,132	79,189
Child support provision	56,492	85,547	(29,423)
Total change in debt provisions	149,786	241,537	127,733
Student loan write-offs	210,383	248,788	259,963
Borrowing expenses
Income equalisation reserve interest	1,700	5,000	4,000
Adverse event income equalisation interest	100	6	13
Total borrowing expenses	1,800	5,006	4,013
Total expenses	1,533,269	1,643,831	2,015,609

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Assets – Crown as administered by Inland Revenue

as at 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Assets
Current assets
Cash and bank balances	1,600,417	1,379,830	1,379,830
Receivable and advances	5,521,902	5,639,765	5,756,323
Total current assets	7,122,319	7,019,595	7,136,153
Non-current assets
Student loans long-term	6,326,561	6,065,221	6,668,143
Student loans provisions for doubtful debts	(734,649)	(725,279)	(797,078)
Total non-current assets	5,591,912	5,339,942	5,871,065
Total assets	12,714,231	12,359,537	13,007,218

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Liabilities – Crown as administered by Inland Revenue

as at 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Liabilities
Current liabilities
Payable and provisions	6,682,039	6,797,657	7,829,775
Borrowings	69,232	212,115	249,823
Total current liabilities	6,751,271	7,009,772	8,079,598
Total liabilities	6,751,271	7,009,772	8,079,598

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Movements in Equity – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Opening balance	6,123,169	5,854,900	5,349,765
Net result from Crown operating activities	38,770,361	40,537,587	42,337,771
Asset transfer between departments	0	0	0
Disbursements from New Zealand Debt Management Office	11,508,600	10,728,963	11,822,463
Paid to New Zealand Debt Management Office	(50,439,170)	(51,771,685)	(54,582,379)
Closing balance	5,962,960	5,349,765	4,927,620

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Cash Flows from Operating Activities – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Cash flows from operating activities
Direct taxation
Individuals
Source deductions	17,650,000	17,654,000	18,653,000
Other persons	4,500,000	4,542,000	4,630,000
Refunds	(1,340,000)	(1,372,000)	(1,452,000)
Fringe benefit tax	431,000	427,000	445,000
Sub-total individuals	21,241,000	21,251,000	22,276,000
Companies
Gross company tax – other	7,293,000	7,943,000	8,465,000
Gross company tax – state-owned enterprises	386,000	363,000	444,000
Gross company tax – Crown entities	56,000	48,000	52,000
Gross company tax – NZS fund	181,000	234,000	341,000
Refunds	(1,016,000)	(782,000)	(826,000)
Sub-total companies	6,900,000	7,806,000	8,476,000
Withholding tax
Residents' interest	1,300,000	1,470,000	1,529,000
Residents' dividends	55,000	60,000	65,000
Foreign source dividends	135,000	175,000	182,000
Non-residents' income	814,000	923,000	813,000
Specified superannuation tax	0	546,000	577,000
Sub-total withholding tax	2,304,000	3,174,000	3,166,000
Total income tax	30,445,000	32,231,000	33,918,000
Other direct taxation
Estate and gift duties	2,000	2,000	2,000
Sub-total other direct taxation	2,000	2,000	2,000
Total direct taxation	30,447,000	32,233,000	33,920,000

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Cash Flows from Operating Activities – Crown as administered by Inland Revenue (continued)

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Indirect taxation
Goods and services tax
GST (Inland Revenue)	15,667,000	15,340,000	16,122,000
GST (refunds)	(6,922,000)	(6,442,000)	(6,861,000)
Sub-total GST	8,745,000	8,898,000	9,261,000
Other indirect taxation
Stamp and cheque duties	54,000	9,000	8,000
Approved issuer levy	0	53,000	54,000
Gaming duties	318,000	314,000	328,000
Other	1,000	3,000	1,000
Sub-total other indirect taxation	373,000	379,000	391,000
Total indirect taxation	9,118,000	9,277,000	9,652,000
Total taxation receipts	39,565,000	41,510,000	43,572,000
Compulsory fees, fines and penalties (child support)	189,100	174,800	191,200
Other receipts
Interest from investment (student loan)	204,452	253,210	252,806
Other operating receipts (ACC)	0	0	0
Total other receipts	204,452	253,210	252,806
Total cash flows provided from operating activities	39,958,552	41,938,010	44,016,006
Cash disbursed for:
Finance cost	(1,800)	(5,006)	(4,013)
Family assistance tax credits	(1,166,300)	(1,140,500)	(1,624,900)
Total cash disbursed to operations	(1,168,100)	(1,145,506)	(1,628,913)
Net cash flows from operating activities	38,790,452	40,792,504	42,387,093

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Cash Flows from Investing Activities – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Cash flows from investing activities
Cash provided from
Repayment of advances (student loan capital)	271,018	251,614	335,115
Net cash from investing activities	271,018	251,614	335,115

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Cash Flows from Financing Activities – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Cash flows from financing activities
Cash was provided from:
Income equalisation scheme	74,000	110,461	155,658
Total cash provided	74,000	110,461	155,658
Cash disbursed for:
Repayment of income equalisation	(204,900)	(111,857)	(117,950)
Total cash disbursed	(204,900)	(111,857)	(117,950)
Net cash flows from financing activities	(130,900)	(1,396)	37,708

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Cash Flow Movements – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Net movement in cash	38,930,570	41,042,722	42,759,916
Opening cash balance	1,600,417	1,379,830	1,379,830
Cash received from New Zealand Debt Management Office	11,508,600	10,728,963	11,822,463
Paid to New Zealand Debt Management Office	(50,439,170)	(51,771,685)	(54,582,379)
Closing balance	1,600,417	1,379,830	1,379,830

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Operating Surplus to Operating Cash Flows – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Net crown operating surplus	38,770,361	40,537,587	42,337,771
Movement in working capital
(Inc)/dec student loan short-term	(46,383)	(25,225)	(77,492)
(Inc)/dec provision bad debts	64,448	167,236	55,934
(Inc)/dec tax receivable (general tax)	(44,000)	60,000	28,000
(Inc)/dec GST debtors	0	0	0
(Inc)/dec receivables (child support)	(52,000)	(104,000)	(123,000)
Inc/(dec) payables (student loan)	1,058,585	996,481	1,032,118
Inc/(dec) payables others	0	0	0
Total working capital movements	980,650	1,094,492	915,560
Other non-cash items
Other non-cash items (student loan capital)	(271,018)	(251,614	(335,115)
Student loan provision	(689,541)	(587,961)	(531,123)
Ministry of Education student loan transfer	0	0	0
Total other non-cash items	(960,559)	(839,575)	(866,238)
Net cash flows from operating activities	38,790,452	40,792,504	42,387,093

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Contingent Liabilities – Crown as administered by Inland Revenue

as at 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Tax in dispute
Tax in dispute	350,000	380,000	380,000
Total quantifiable contingent liabilities	350,000	380,000	380,000

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Accident Compensation Collection – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Accident compensation collection type
Earner premium (employees – provisional)	711,700	737,800	785,800
Total accident compensation collection type	711,700	737,800	785,800

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Expenditure and Appropriations – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Appropriations for benefits and other unrequited expenses
Child support payments	145,000	137,000	150,000
Family support tax credit	918,000	902,000	1,298,000
Family tax credit	14,000	13,000	14,000
Child tax credit	150,000	142,000	141,000
Parental tax credit	15,000	14,000	16,000
In-work Payment	0	0	57,000
Paid parental leave	74,300	77,500	97,900
Total benefit and other unrequited expenses	1,316,300	1,285,500	1,773,900
Appropriations for other expenses
Provision for Doubtful debt - general tax	0	75,046	80,398
Interest write-offs and provision for doubtful debt – student loan	0	326,920	339,152
Provision for doubtful debt – child support	0	85,547	(29,423)
Total borrowing expenses	0	487,513	390,127
Total expenditure and appropriations	1,316,300	1,773,013	2,164,027

The accompanying accounting policies form part of these financial schedules

Schedule of Forecast Student Loan Movements – Crown as administered by Inland Revenue

for the year ending 30 June 2006

	Budgeted   2005 $000	Estimated actual 2005 $000	Forecast   2006 $000
Analysis of student loans
Outstanding balance
Total loans outstanding (including interest)	6,848,414	6,653,142	7,333,556
Total provisions (capital and interest)	(793,140)	(796,907)	(876,096)
Total student loans	6,055,274	5,856,235	6,457,460
Opening balance	5,322,686	5,246,880	5,856,235
Amount advanced in current year	1,058,585	996,481	1,032,118
Interest accrued on outstanding loan balances	448,530	444,618	496,180
Repayment of base capital	(271,018)	(251,614)	(335,115)
Repayment of accrued interest	(204,452)	(253,210)	(252,806)
Interest written off and movement in provision	(210,383)	(248,788)	259,963)
Movement in provision	(88,674)	(78,132)	(79,189)
Closing balance	6,055,274	5,856,235	6,457,460

The accompanying accounting policies form part of these financial schedules

Inland Revenue office locations

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Date published: 16 May 2005

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